Ducommun’s third quarter results met Wall Street’s revenue expectations but prompted a negative market reaction, with investors focused on the company’s sharply lower operating margin due to a substantial litigation settlement. Management attributed the quarter’s top-line growth to continued strength in the defense segment, particularly missiles and radar programs, which offset declines in commercial aerospace. CEO Stephen Oswald acknowledged ongoing commercial aerospace destocking as a key headwind, explaining, “We achieved this despite continued headwinds in our commercial aerospace business, which has been previously forecasted due to destocking at BA and SPR.” Adjusted margins improved, but the one-time legal charge dominated GAAP profitability.

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While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.

Our Top 5 Analyst Questions From Ducommun’s Q3 Earnings Call

• Kenneth Herbert (RBC Capital Markets) asked about commercial aerospace bookings and 737 MAX ship rates. CEO Stephen Oswald said activity was strong at both Boeing and Spirit, explaining shipments currently range from the mid-20s to upper 20s per month, with some production running ahead to maintain level factory loads.
• Michael Crawford (B. Riley Securities) questioned the difference between reported backlog and remaining performance obligations (RPO). CFO Suman Mookerji clarified that backlog is constrained to a two-year window and includes certain forecasts, while RPO is unconstrained and reflects all unfulfilled orders.
• Samuel Struhsaker (Truist Securities) inquired about the trajectory for margin expansion. Mookerji responded that savings from facility consolidation and increased engineered product mix will be the main drivers, with more pronounced benefits expected in 2026.
• Samuel Struhsaker (Truist Securities) also asked about M&A capacity following the litigation payment. Mookerji said Ducommun still has liquidity and is working with banks to expand its credit facility, maintaining M&A as a strategic focus.
• Noah Poponak (Goldman Sachs) pressed on the timing of commercial aerospace recovery and its impact on overall growth in 2026. Mookerji stated that inventory destocking at Boeing and Ducommun would remain a headwind into the first half of 2026, with a more substantial recovery expected later.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will monitor (1) the pace of defense order growth, particularly from missile and radar programs; (2) signs of stabilization or improvement in commercial aerospace demand as destocking runs its course; and (3) realization of cost savings and margin expansion from facility consolidation efforts. Progress in shifting more revenue to engineered products and updates on the M&A pipeline will also be key indicators of strategic execution.

Ducommun currently trades at $96.04, up from $92.12 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free for active Edge members).

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